Introduction -

Quantitative Analysis
A scientific approach to managerial decision making in which raw data are processed and
manipulated to produce meaningful information.
The analysis and application of mathematical tools
and techniques to a wide range of problems.
 QUANTITATIVE ANALYSIS

● Decisions based on quantitative data can be automated

● Generally quantitative analysis will aid the decision making process

● Important in many areas of management

● Production/Operations Management

● Supply Chain Management

● Business Analytics
 Linear Programming

● Widely used mathematical modeling technique to assist with planning and

decision making relative to resource allocation

● Many management decisions involve making the most effective use of limited
resources.
 REQUIREMENTS OF LP PROBLEMS

Objective Function - Seeking to maximise or minimise some quantity

Constraints - The restrictions presented within the problem

Linear Equations - Mathematical linear equations and/or inequalities

 FORMULATING LP PROBLEMS

1 Completely understand the managerial problem being faced

2 Identify the objective and the constraints

3 Define the decision variables

Use the decision variables to write mathematical expressions for the objective
4 function and the constraints
 FORMULATING LP PROBLEMS
UNDERSTAND THE PROBLEM

Flair Furniture produces inexpensive tables and chairs.

Processes are similar, both require carpentry work and painting and varnishing

● Each table takes 4 hours of carpentry and 2 hours of painting and varnishing

● Each chair requires 3 hours of carpentry and 1 hour of painting and varnishing

● There are 240 hours of carpentry time available and 100 hours of painting and
varnishing

● Each table yields a profit of R70 and each chair a profit of R50
 IDENTIFY VARIABLES

Let T = Number of tables to be produced per week

C = Number of chairs to be produced per week

The values for T and C must be nonnegative

•T ≥ 0 (number of tables produced is greater than or equal to 0)

•C ≥ 0 (number of chairs produced is greater than or equal to 0)

IDENTIFY THE OBJECTIVE

Objective:
The objective is to maximise profit .

Maximize profit = 70T + 50C

 IDENTIFY CONSTRAINTS

The data represented tabularly should look as follows:

HOURS REQUIRED TO PRODUCE 1 UNIT
DEPARTMENT TABLES (T) CHAIRS (C) AVAILABLE HOURS
PER WEEK

Carpentry 4 3 240

Painting and 2 1 100

varnishing

Profit per unit 70 50

The hours of carpentry time used cannot The hours of painting and varnishing time used cannot
exceed 240 hours per week exceed 100 hours per week

● Carpentry time used ≤ Carpentry time ● Painting and varnishing time used ≤ Painting and
available varnishing time available
● 4T + 3C ≤ 240 (hours of carpentry time) ● 2T + 1C ≤ 100 (hours of painting and varnishing
time)
 Complete Mathematical Formulation

Maximize profit = 70T + 50C

subject to
4T + 3C ≤ 240 (carpentry)
2T + 1C ≤ 100 (painting and varnishing)
T, C ≥ 0 (nonnegativity)

Graphical Solution to an LP Problem

● This only works when there are just two decision variables

● It is not possible to plot a solution for more than two variables

● This approach provides valuable insight into how other approaches work

● Non negativity constraints mean that we are always working in the first (or northeast) quadrant of a graph
 Graphical Solution to an LP Problem

It is important to identify the axis on which each constraint will be plotted

 Graphical Solution to an LP Problem (cont’d)

Plot each constraint equation on a graph

● Graph the equality portion of the constraint equations 4T + 3C = 240

● Solve for the axis intercepts and draw the line

Let T=0
Then 4(0) + 3C =240
3C = 240
C = 80

Let C=0
Then 4T + 3(0) = 240
4T = 240
T = 60
Graphical Solution to an LP Problem (cont’d)

● Any point on or below the constraint

plot will not violate the restriction

● Any point above the plot will violate

the restriction
 Graphical Solution to an LP Problem (cont’d)

For the painting and varnishing constraint:

2T +C = 100

Let T=0
Then 2(0) + C = 100
C = 100

Let C=0
Then 2T + (0) = 100
2T = 100
T = 50

Feasible region is below the

line.
Graphical Solution to an LP Problem (cont’d)

How did we get the corner point (30,40)?

That is the point where the two lines
cross, meaning that is the point where
they are equal.

Thus:
For 2T + C <= 100 → C = 100 - 2T

Substitute this in the other equation;

4T + 3(100-2T) = 240
4T +300 - 6T = 240
60 = 2T
T = 30

Now Substitute T = 30 back in original

equation
2 (30) + C = 100
60 + C = 100
C = 100-60
C = 40
(T,C) = (30,40)
 CORNER POINT SOLUTION METHOD

Work out the profit for each corner point:

NUMBER OF TABLES (T) NUMBER OF CHAIRS (C) PROFIT = R

70T + 50C

0 0 0

50 0 3500

0 80 4000

30 40 4100

The optimal solution is:

Produce 30 tables and 40 chairs for a profit of R4100.
 Slack and surplus

At the optimal solution,

slack is 0 as all 240 hours
are used

Slack is the amount of a resource that is not used

● For a less than or equal (<=) constraint

Slack = (Amount of resource available) − (Amount of resource used)

Lets say Flair decides to produce 20 tables and 25 chairs

4(20) + 3(25) = 155 (carpentry time)

There is 240 hours carpentry time available

Thus
240 − 155 = 85 hours (Slack time in carpentry)
 Slack and surplus (cont’d)

● Surplus is used with a greater than or equal to (>=) constraint to indicate the amount by
which the right hand side of the constraint is exceeded

● Surplus = (Actual amount) − (Minimum amount)

If you have a constraint

T + C ≥ 42

If T = 20 and C = 25, then

20 + 25 = 45
Surplus = 45 − 42 = 3
 SOLVING MINIMISATION PROBLEMS

● Many LP problems involve minimizing an objective such as cost

● Minimization problems can be solved graphically
● Set up the feasible solution region
● Use the corner point method
● Find the values of the decision variables (e.g., X 1 and X 2 ) that yield the minimum cost
The Holiday Meal Turkey Ranch is considering buying two different brands of turkey feed and blending them
to provide a good, low cost diet for its turkeys.
COMPOSITION OF EACH POUND OF FEED (OZ.)

INGREDIENT BRAND 1 FEED BRAND 2 FEED MINIMUM MONTHLY

REQUIREMENT PER
TURKEY (OZ.)

A 5 10 90

B 4 3 48

C 0.5 0 1.5

Cost per 2 cents 3 cents

pound
 SOLVING MINIMISATION PROBLEMS (cont’d)

Let
X1 = number of pounds of brand 1 feed purchased
X2 = number of pounds of brand 2 feed purchased

Minimize cost (in cents) = 2X1 + 3X2

subject to:
5X1 + 10X2 ≥ 90 ounces (ingredient A)
4X1 + 3X2 ≥ 48 ounces (ingredient B)
0.5X1 ≥ 1.5 ounces (ingredient C)
X1, X2 ≥ 0 (nonnegativity)
 SOLVING MINIMISATION PROBLEMS (cont’d)

● Solve for the values of the three corner points

● Point a is the intersection of ingredient constraints C and B

4X1 + 3X 2 = 48 and X1 = 3
Substituting 3 in the first equation, we find X2 = 12
a= (3,12)

● Solving for point b we find X1 = 8.4 and X2 = 4.8

● Solving for point c we find X1 = 18 and X2 = 0

Substituting these values back into the objective function we find

Cost = 2X1 + 3X2
Cost at point a = 2(3) + 3(12) = 42
Cost at point b = 2(8.4) + 3(4.8) = 31.2
Cost at point c = 2(18) + 3(0) = 36

The lowest cost solution is to purchase 8.4 pounds of brand 1 feed and 4.8 pounds of brand 2 feed for a
total cost of 31.2 cents per turkey
 FOUR SPECIAL CASES IN LP

1 No feasible solution
 FOUR SPECIAL CASES IN LP (cont’d)

2 Unboundedness
 FOUR SPECIAL CASES IN LP

3 Alternate optimal solutions

 FOUR SPECIAL CASES IN LP

4 Redundancy
 End

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